Inheritance tax on selling mother's house

moneysaving_novice

Hello
Can someone please give me some advice about inheritance tax due on selling my late mothers house. My mother died two weeks ago leaving everything to myself and my brother. Her only asset is the house she lived in which will have to be sold. The house has been valued at £400,000. As this is above the IHT threshold I am not sure whether we will be liable to pay IHT. My mother was a widow. My father died in 1963, leaving everything to my mother, which was only the house, probably valued then at about £5500. As my father died so long ago can we claim any of his nil rate allowance and increase the IHT exempt amount to twice the current annual amount?

Imelda

Sorry for your loss moneysaving novice.

Yes, you can transfer the proportion of nil rate allowance not used by your father to your mother's estate. Having the right paperwork to show HMRC how much he used up all those years ago is going to be the problem though.

Richard_Webster

Don't start trying to sell the house until you have a grant of probate which will involve sorting out the IHT issue (providing detailed accounts to HMRC) and producing a copy of the father's will etc and death certificate.

It certainly looks as if you will be entitled to the double allowance. IHT is not payable on a sale but in order to get the grant of probate which you need to to sell in the first place.

Really unless you a have a solicitor sorting it out for you or you really do know what you are doing you could get into an awful mess.

There is a least one active thread on this forum where people are buying and a property is owned by a dead person where there have been delays in getting probate and some very unhappy buyers.

puddy

so if the OP had to pay IHT, they would pay it prior to the house being sold?? How does someone do that if they have absolutely no money?

Imelda

puddy wrote: »

so if the OP had to pay IHT, they would pay it prior to the house being sold?? How does someone do that if they have absolutely no money?

yep, paid before. If no money then I think the executors get a loan.

RAS

Hi

You need to pay the IHT within 6 months of the death, if there is any cash available a solictor can get the bank to release the money to pay it off.
Op this is one case when you need to pull together as much paperwork as possible and get thee to a good solicitor versed in probate ASAP.

CLAPTON

puddy wrote: »

so if the OP had to pay IHT, they would pay it prior to the house being sold?? How does someone do that if they have absolutely no money?

in the case of illiquid assets (i.e. a property) HMRC will simply charge interest on the money owed
it's pretty standard stuff

puddy

so if someone leaves you a house that you need to pay IHT, and they dont leave any separate cash inheritance and you dont have the money for the IHT, you would have to get a loan to pay the money within 6 months before you can get the house sold to get the money from there?

what happens if you cant get a loan or within the timescales of 6 months?

i had no idea it was payable first...

loubel

moneysaving_novice wrote: »

Hello
My father died in 1963, leaving everything to my mother, which was only the house, probably valued then at about £5500.

Unfortunately there was no spousal exemption back then and the tax threshold was £5,000 so there will be no nil rate band left to transfer.

blackshirtuk

puddy wrote: »

so if someone leaves you a house that you need to pay IHT, and they dont leave any separate cash inheritance and you dont have the money for the IHT, you would have to get a loan to pay the money within 6 months before you can get the house sold to get the money from there?

what happens if you cant get a loan or within the timescales of 6 months?

i had no idea it was payable first...

Yes the tax is payable first on Liquid assets, tax on property can be defferred.

The Taxman always gets his money ASAP:mad:

googler

All mentions of 'probate' will be moot if the property is in Scotland, and the deceased was resident there - different process applies.